Question

"Money left on the table" is a term used to describe IPO under-pricing. Which of the...

"Money left on the table" is a term used to describe IPO under-pricing. Which of the following is a common measure for this phenomena?

a.

First day returns of IPO's
b.

None of the above
c.

SEC filing costs
d.

Flotation costs
e.

Underwriter spread
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Homework Answers

Answer #1

Answer:

Correct answer is:

a. First day returns of IPO's

Explanation:

Money left on the table in  IPO under-pricing is the difference between closing price of share on first day when it is listed after IPO and the offer price. Common measure for this phenomena is first day returns of IPO received by investors.

SEC filing cost is registration cost paid to SEC. Flotation costs and underwriter spread are issuing costs.

Hence option a is correct and other options b, c, d and e are incorrect.

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